I have started a vacation site specifically for Kenya and registered to one affiliate program and showing the banner on my site, but interestingly Google Adsense is also showing the affiliate network on their Ads. Is Google going to penalized my site
No. Ads of the same product that you see in adsense are from another affiliate/merchant on adwords promoting that product. As your site is relevant for that product phrase you're getting more exposure from that product.
Google has it's own affiliate network, why they'll penalize you ?
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